High-yield savings accounts and Certificate of Deposit (CD) were much more profitable in 2024 than in prior years, potentially leaving some taxpayer﷽s with larger tax bills. Experts say there are some ways to defer or offset the amount of taxes they owe.

The Federal Reserve kept its influential 澳洲幸运5官方开奖结果体彩网:federal funds rate higher than usual in 2024, which led to higher rates for savings accounts, 澳洲幸运5官方开奖结果体彩网:money market accounts, and CDs. Banks typically follow the trajectory of the F💜ed funds rate to determine the rates they pay their customers.

Savers were able to earn more last year from high-yield savings acco♛unts, but that also means they may have to pay more in taxes on their 2024 tax return. The IRS counts any interest earned of $10 or more as income on 澳洲幸运5官方开奖结果体彩网:Form 1099-INT, meaning taxpayers will have to pay the same rate on interest earned as they would on their income.

But here's what you can do to help lower that tax hit.

Tax Deductions, IRA Contributions May Help

Experts suggest contributing to an IRA or taking more deductions to offset the amount of taxes you may need to pay on interest earned and lower your overal💃l tax bill.

Contributions into a 澳洲幸运5官方开奖结果体彩网:traditional IRA are tax-deductible, and taxes are not due until the funds are withdrawn. This is the only account where you can still make contributions in 2025 and include it on your 2024 tax return up until the 澳洲幸运5官方开奖结果体彩网:tax deadline.

While taxpayers will event🔴ually have to pay taxes🌃 when they withdraw funds from an IRA, this can be a way to defer the taxes they owe for interest earned in 2024.

"You have a regular CD, and the bank pays you $1,000 in interest, and then you put the $1,000 into your IRA. You may get an IRA deduction for that $1,000, but it's still a taxable event," said Paul Joseph, attorney and CPA.

In addition to IRA deductions, taxpayers should ensu🍌re they utilize every deduction and credit they are eligible for to lower their overall tax bill, said Jake Falcon, wealth advisor and CEO of Falcon Wealth Advisors.

This can include tax benefits like the 澳洲幸运5官方开奖结果体彩网:Child Tax Credit or the student𝓀 loan interest deduction. While these are not directly tied to interest earned from CDs or savings accounts, they can help balance out a higher tax bill.

"Even if it's not dollar for dollar with the interest earned ... there are other alternatives to lower your overall taxes that could help offset the interest you earn from a high yield savings account," Falcon said.